Ellesmere is absolutely right: Tax avoiders are damaging the High Street

Ellesmere at the waterfrontIn his column in yesterday’s Ipswich Star David Ellesmere raises the collapse of Jessops, HMV and Blockbuster, three High Street names, in the last week. He attributes this to the state of the economy, which is de rigueur from the Labour PPC. He also attributes it to competition from internet based businesses, aligned with those who are registered in tax havens to minimise any tax liability.

In this Mr Ellesmere is absolutely right. It is self evident that any business that doesn’t pay tax will have an advantage over those that do. It is self evident that any business that doesn’t pay rent or rates will have an advantage over those that do. Internet sales have undercut the business model that made HMV and Blockbuster successful for many years. Jessops business model has been undermined by advances in technology and increased competition from supermarkets; digital cameras can be bought increasingly cheaply either online or from a supermarket, and without the need to develop photographs, why would you need a specialist store?

Last year John Lewis’s managing director, Andy Street, called on the Treasury to demand tax is paid in the country where profits are made: Amazon made £3.3bn in sales but paid zero UK corporation tax on any of the profits of that income. “They will out-invest and ultimately out-trade us,” tax-paying John Lewis protests, unable to compete fairly with tax-shirkers. This should be easy to fix.

Walking through Ipswich town centre is pretty depressing this January. With some honourable exceptions, like the revamped Clinton’s store, itself a restructured company taken over by its creditors, the town centre is beginning to look down at heel. The proposals put forward by Sir Stuart Rose last year have fallen by the wayside in favour of doing nothing. Paul Clement, from the business funded Ipswich Central, reveals that the amount of money spent by retailers in the town centre fell by 2.9 per cent during November and December compared with the same period in 2011.

Whilst Mr Ellesmere is absolutely right to say “we might individually get good deals in the short term but in the long term, tax dodging by international companies will impoverish us all,” he offers no solutions here. Indeed he accepts that it is difficult to turn things around. “I don’t think we can stop this trend and, given that so many people are strapped for cash, I wouldn’t be the one to tell them to forsake cheap online deals.”

More must be done by the Government to ensure that companies like Amazon pay tax on profits made in this country. But equally more must be done by local Government to improve demand for stores here in Ipswich town centre. Moving the market may have proven too controversial for the Borough Council, but improving the way the town centre looks is equally important.

Similarly the County Council needs to look to see what it can usefully do. Reopening the Park & Ride site at Bury Road, and speeding up the roadworks as part of the Travel Ipswich project, could do much for the town.

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8 Responses

  1. Two points:

    Firstly, if tax avoidance is an issue here, then change the law, don’t whinge about companies quite properly, legally and legitimately limiting their costs. Indeed, one could reasonably argue that by being internet-based, these companies are avoiding business rates. So where does that particular route end?

    Secondly, a lot of what is kiling Ipswich is the council’s rapacious parking fees and business rates. We even have to pay to use Fonnereau Road now. The other day, I was in town for an unavoidable appointment around midday: Fonnereau Rd had 3 cars on it, and Waterworks Street none. NONE! When parking was free, these areas were full pretty much constantly. How many fewer people are there going into town now? Lots, that’s how many.

    I have a radical idea for the Council. STOP SPENDING MONEY.

    • Parking fees killing the town? They don’t affect me directly, in fact if the increase in parking cost reduces the amount of motor traffic in Ipswich and makes it a nicer place to walk and cycle with less motor emissions all the better.

    • Absolutely right panscourer, we need to change the law so that taxes are paid on the profits made in the country that they are made in. Of course we also need to take a long hard look at what the consequences of that are, so that those multinational British companies, currently paying tax here on profits made elsewhere (BP anyone?), are also able to pay taxes here. Ultimately it is the businesses responsibility to their shareholders to pay as little tax as possible. It is for Parliament, and intra-national institutions, to determine tax structures.

      On parking fees, the on road parking scheme is organised in such a way as it has to be self financing. The county council insisted that Ipswich included some new roads, because it was making a loss. However overall car parking is getting cheaper in Ipswich. Most of the Borough car parks have had their rates slashed. Eventually this may have an effect on the largest absentee landlord this town has, NCP. Car parking in Ipswich is actually not that expensive when compared with Norwich and Cambridge. Unless you park with NCP.

      The footfall in the town is actually up over Christmas. It is just that people don’t feel they have as much money to spend. This isn’t necessarily because of the economic conditions, but as much as anything because people are not adding to their debt; instead they wanted an “austerity” Christmas based on the cash they actually had, rather than more borrowing. Whilst this isn’t going to be welcomed by businesses in the short term, it is actually a return to sense by the British public.

      • “Absolutely right panscourer, we need to change the law so that taxes are paid on the profits made in the country that they are made in.”

        I think you’ll find that we can’t, as that’s an EU competence. Any company trading in the EU can choose to pay its Corporation taxes in any country in the EU in which it has a presence. If you look at the Corporation rates across the EU, ours are:

        “20% for small annual profits under £300000 and 24% for annual profits over £300000, reducing to 21% in 2014″

        and Ireland is 12.5%. Where would you pay, given that you have a legal choice? Why would any multi-national choose to pay their EU dues here when they don’t have to?

        Paying CT in Luxemburg is a bit more complicated, but the rates are a lot more generous, so mid-sized companies generally don’t bother, but it’s very worth it for the likes of Google and Amazon:

        “28.59% (commercial activity); 5.718% on intellectual property income, royalties; 0% on dividends and capital gains (under certain conditions in case of major participation)”

        We can bitch and whinge all we like, but it’s an EU competence, and like so much of the EU’s doings, we have no real say in it, and no means of escape. I just wish people were MUCH better informed about the EU than they are…

      • We can’t change the law because it’s an EU competence? Have you had your head in the clouds for the last fortnight? EU competences will be renegotiated by the British Government if the Tories win the next election. To say we can’t because it is an EU competence is to suggest that all EU law is set in stone and may never change. That in itself is a position open to doubt.

        Just last year the Commission proposed altering the existing legislation on tax havens and double taxation rules, to better allow countries to tax profits made in the country of origin rather than allowing taxes to escape off-shore. The proposal was made by the Germans and the British, and is likely to find its way forward through the complex changes necessary when the French & Germans start renegotiating the TFEU. It is a complex area, made more so by the Cadbury Schweppes case (C-196/04) which hindered the UK’s Controlled Foreign Company tax rules. But the fact is that, should the UK Government decide to push for some movement here, they will be pushing against an open door.

        In reference to your last sentence, you might find people less bored of UKIPpers if you weren’t so damned patronising and rude the whole time. I could go into a long and pointless speech about the supremacy of Parliament, based on the writings of Albert Venn Dicey, but I won’t. I could point out that, as a consequence of the Lisbon Treaty of 2009, which you have previously attacked, there is now a procedure for a sovereign nation state to leave the EU should it wish to, other than simply repealing the European Communities Act 1972, a method which would cause all sorts of legislative earthquakes. I could point out that there are ways to work within the bounds of existing UK and EU legislation that would allow us to better regulate businesses that do business here. I won’t, because I assume that you knew all of that, given you are so much better informed about the EU than anyone else in the world.

    • I am reminded that business rates are not set by the council, merely collected by them on behalf of the Treasury. A truly democratic local Government would put business rates back in the hands of elected councillors; you would find those businessmen who feel they don’t have any need to put their considerable minds to bear on local councils would suddenly become very interested indeed.

  2. Good news that footfall was up… see the council and Ipswich Central did do something right with the various events and new lights. They can only get people there, they can’t make them spend. That’s down to the retailers. Again, business rates and parking get blamed. But as pointed out in another comment, Business rates are set by central government. Parking, well IBC have reduced cost in all the their carparks to try and force the privately owned ones down too… we’ll see if that happens.

    I’d like to know what the council plans to with Crown Carpark? Are they going to build a new multistorey? Could they dip into captial receipts and buy up some land near town and open anther carpark to keep pusing the prices down and offering choice?

    People moan about the cost of parking, but at Xmas i parked in the waterfront Mill building for 60p an hour – an absolute bargain!! There were all these people sitting in traffic on the one way obviously heading to the centre to park and I was thinking why not just pull in right here and park for cheap and walk the extra 100 yards… It’s barely five mins walk.

    Ipswich needs a refresh, it needs open spaces, trees, lights, a nice street scene. Parts of it like buttermarket street, giels circus and the Saints work well… but the main thoroughfare if looking pretty dire.

    The piazza as suggested by Stuart Rose is a brilliant idea… and despite these times of austerity IBC reall need to put their hand in their pocket on that one. Move the market the queen street/princes street – its perfect.

    Then what’s really needed is some new shops… and by that i mean some new units… a revamped buttermarket and tower ramparts could do it, but also a row of units in the cattle market to connect the waterfront and the town and create that north south link… The cattle market links right into the buttermarket, which links to the walk which links to tower ramparts which is perfect.

    And the bus stations needs to be moved and combined on Tackett street car park. Tower ramparts should be partially used for the expansion of the shopping centre and partically to create a public space.

    the fill up the empty units? more bars, coffee shops, restaurants, gyms, a bowling alley (get people into town to socialise), the VUe cinema, beauty and therapy salons, more offices and businesses (non retails – to get people working in town) and even a primary school! Anything to drawn people into the heart of the town.

  3. BR says “Ultimately it is the businesses responsibility to their shareholders to pay as little tax as possible.” Here is the nub of the problem in my opinion. Should businesses act amorally ? Shouldn’t businesses ( that’s to say their controllers) have a responsibility to the community? A generation or so ago there seemed to be just one business acting amorally. That was the Dewhurst butchery chain. Their owners, the Vestey brothers, pioneered the concept of using tax havens. They were the exceptions then, nowadays the exceptions are those companies who acknowledge that they have a responsibility to the communities who provide them with their profits. Don’t throw in red herrings about car parking fees please! The Starbucks, Amazons and their like are just the tip of the iceberg. Buy the book ‘ Treasure Islands: Tax Havens and the Men who Stole the World’ and then get angry and try to get our M.P.s to put some backbone into HMRC to stop being supine. Example; Did you know that HMRC sold its buildings to a firm on a sale and lease-back arrangement? Wouldn’t be so bad if the firm in question paid tax on its profits but no, it used highly paid lawyers (some of whom are now in the upper levels of HMRC) to find ways so that its profits are taken out of this country and hidden in a tax haven. I repeat, read the book and get angry. Now I’ll try to simmer down!

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